Amazon’s New Store: Utility Computing
1. What technology services does Amazon provide? What are the business advantages to Amazon and to subscribers of these services? What are the disadvantages to each? What kinds of businesses are likely to benefit from these services?
Amazon provides cloud computing, also known as utility computing. Utility providers like electric, water, and natural gas, Amazon provides computing capacity to businesses that want to pay only for what they use. Like most companies, Amazon used only a small portion of it total computing capacity at any one time. Its infrastructure is considered by many to be among the most robust in the world. Subscribers to the Simple Storage Service (S3) can use only what they need without having to purchase their own hardware and software. Companies may want to go with more established names in computing; Amazon is not known as a technology company—its reputation is more as a retailer. It’s combating this perception by not requiring service contracts. However, its competitors like IBM, HP, and Sun Microsystems may follow Amazon’s lead and offer utility computing without requiring service-level agreements Businesses, large and small, can benefit from using AWS. The service relieves small business from the TCO of having its own systems. Large businesses can use AWS as an auxiliary unit without having to increase their hardware and associated TCO.
2. How do the concepts of capacity planning, scalability, and TCO apply to this case? Apply these concepts both to Amazon and to subscribers of its services.
Amazon must provide hardware capacity planning and scalability for not just its own needs but for all its subscribers. Overestimates will create a drain on Amazon’s financial assets. Underestimating capacity and scalability will create shortages for its own business and its subscribers. Too many instances of non-availability will create the impression that Amazon can’t...
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